KARACHI, June 22: The government has refused to lift 165,000 tons of sugar offered by importers at Rs33 per kg on the plea that there is a glut in the market and the Trading Corporation of Pakistan (TCP) has already achieved its import target of 800,000 tons.

According to market sources presently around 2.2m tons of sugar stocks were lying in the country which included 0.780m tons in Punjab, 0.255m tons in Sindh, 0.8m tons (imported) with the TCP and 0.365m tons with importers.

These stocks are sufficient to meet the country’s sugar needs till next crushing season which normally starts in early November. Average monthly consumption stands around 0.310m tons.

Consequently, the sources said about 1.86 million tons would be consumed by end of December 2006 and carryover stocks of around 0.2 million tons would be used as buffer stocks for next season.

However, analysts feel that next sugarcane crop will be of larger size because short sugarcane crop this season helped growers and millers make good money. Historically whenever growers earn well they increase the crop area in the next season that results in bumper crop and higher production depresses the prices.

Pakistan Commodity Importers Association (PCIA) president Raees Ashraf Tarmohammad told Dawn that sugar importers were feeling the pinch for two reasons, first they had very large inventories and secondly the State Bank of Pakistan (SBP) had made it mandatory for sugar traders to pay 50pc of the amount taken from commercial banks towards financial facility.

“As a result of this sugar traders have been squeezed from both ends,” he said and added that in the past sugar traders were getting full financial assistance against their inventories which was normally based on the credibility of an individual.

Against this, he said sugar mills get bank finances on discounted rates.

He said that adviser to the prime minister on finance Dr Salman Shah on Thursday informed him that the government had turned down the offer of 23 leading sugar importers to lift 165,000 tons at Rs33 per kg. He further said that the banks were also asking for 50pc finances against previous advances given to sugar importers and this was creating liquidity crunch.

Giving some details about the current market situation, he said that owing to slow off-take sugar prices in retail market had come down by two to three rupees. In April sugar (imported) was being quoted at Rs34 to Rs35 per kg in wholesale market and was being sold in retail at Rs38 per kg. However, even at that time locally produced sugar was being sold at Rs40 per kg.

Mr Raees said that importers lifted sugar from world markets at a high rate of $470 to $500 per ton making the landed cost at Rs34.50 to Rs35.50 per kg. Consequently, he said, importers were going to suffer losses under current market situation.